Senate Democrats back to Buffett Rule

Senate Democrats, looking to forestall the across-the-board spending cuts set to take place in March, are planning to push their latest version of the Warren Buffett-style minimum tax on millionaires.

The political advantage is it builds on the 2012 elections in which President Barack Obama and many Democrats campaigned on the idea. And it avoids divisive fights over a series of individual loophole closings in the Tax Code, some of which tax writers prefer to deal with in the context of corporate tax reform.

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Past tax estimates indicate that as much as $46.7 billion could be raised over 10 years from the so-called Buffett Rule — a minimum 30 percent tax on millionaires.

Indeed the revenues generated could be considerably higher, according to some economists, because of the tax deal last month that allowed dividend income — important to the wealthy — to be taxed at a lower 20 percent rate.

The hope is to marry this revenue with more select spending cuts, chiefly at the expense of farm subsidies and defense. For example, as much as $25 billion could be taken from direct cash payments to producers, an outdated system of subsidies that has been harder to defend given the level of farm profits in recent years.

Whatever cuts are made from defense will be significantly less than the $43 billion in reductions threatened in March. Moreover there is a new push by Senate Appropriations Committee Chairwoman Barbara Mikulski (D-Md.) to enact an omnibus appropriations bill to replace the expiring continuing resolution March 27. And that could provide immense relief for the military services which have been hobbled by the CR’s limits on operating and maintenance accounts.

The final package — being ironed out by Mikulski, Majority Leader Harry Reid (D-Nev.), Finance Chairman Max Baucus (D-Mont.) and Budget Chairwoman Patty Murray (D-Wash.) — is not expected to be rolled out until next week. Votes may not occur until after the Presidents’ Day recess, putting the issue in front of the Senate on the eve of the March sequester deadline.